H & E Associates, LLC

H & E Associates, LLC Home Care Business Consulting specializing in licensure and Medicaid/Medicare accreditation for home care, home health, and private duty.

We would provide guidance throughout the licensure and/or accreditation process AND ensure your agency is well prepared to operate successfully in the industry.

I want to be clear upfront: this is educational content and your specific tax situation requires your own CPA. What I am...
09/04/2026

I want to be clear upfront: this is educational content and your specific tax situation requires your own CPA. What I am sharing are areas worth discussing with your tax professional.

YOUR ENTITY STRUCTURE
Many home care agencies start as sole proprietorships or single-member LLCs taxed as sole proprietors. As revenue grows, that structure may no longer be optimal.

An S-corporation election allows you as the owner to split your income between a reasonable salary and distributions. You pay self-employment tax only on the salary portion, not the distribution portion. For a profitable agency, this can represent meaningful annual savings. Ask your CPA at what revenue level this election makes sense for your situation.

RETIREMENT ACCOUNTS FOR SELF-EMPLOYED BUSINESS OWNERS
A SEP-IRA allows you to contribute up to 25% of your net self-employment income each year — potentially tens of thousands of dollars in tax-deferred savings. A Solo 401(k) has even higher contribution limits if you have no full-time employees other than yourself and a spouse. These are dollar-for-dollar deductions against business income.

If you are not contributing to a retirement account through your business, you are leaving a significant deduction — and a significant wealth-building opportunity — on the table.

HOME OFFICE DEDUCTION
If you operate your agency from a dedicated home office space, a portion of your home expenses — mortgage interest or rent, utilities, insurance — may be deductible. The space must be used regularly and exclusively for business.

VEHICLE EXPENSES
If you use a personal vehicle for business — supervisory visits, referral source meetings, supply runs — you can deduct either the actual expenses or the standard mileage rate.

CONTINUING EDUCATION AND PROFESSIONAL DEVELOPMENT
Training costs, conference fees, professional memberships, books, and courses related to your business are generally deductible.

These are conversations to have with your CPA year round.

The worst time to apply for a business loan is when you are desperate for the money. Lenders can feel urgency, and urgen...
09/03/2026

The worst time to apply for a business loan is when you are desperate for the money. Lenders can feel urgency, and urgency looks like risk. The best time to apply is when your financials are clean, your revenue is growing, and you have options.

Here is how to get your agency in position for bank financing:

YOUR FINANCIAL STATEMENTS MUST BE CURRENT AND ACCURATE
Lenders will ask for two to three years of business financial statements — P&L and balance sheet — and often your personal tax returns as well. If your books are behind, disorganized, or inconsistent, the loan application process will expose that. Before you approach a lender, get your books current and have your CPA review them.

YOUR REVENUE MUST SHOW A TREND
A lender making a business loan wants to see that revenue is stable or growing. An agency with flat or declining revenue is a harder underwrite even if the current cash flow looks adequate.

YOUR DEBT SERVICE COVERAGE RATIO MATTERS
Lenders look at whether your business generates enough cash flow to cover the proposed loan payments with a margin of safety. The standard DSCR requirement is 1.25 — meaning your net operating income should be at least 125% of your total debt payments. Know this number before you walk into the bank.

PERSONAL CREDIT COUNTS FOR SMALL BUSINESS LOANS
For most small home care agencies applying for SBA or conventional business loans, the owner's personal credit score and personal financial picture are part of the underwriting. Know your score. Address any derogatory items before you apply.

THE SBA 7(a) LOAN PROGRAM
The SBA 7(a) loan is the most common small business financing vehicle for home care agencies. It can be used for working capital, equipment, or business acquisition. Maximum loan amounts are up to $5M. Terms are typically 10 years for working capital. The SBA does not lend directly — it guarantees loans made by approved lenders, which reduces the lender's risk and increases your chances of approval.

The financial support structure for a home care agency should evolve as the business grows. Here is what each type of fi...
09/02/2026

The financial support structure for a home care agency should evolve as the business grows. Here is what each type of financial professional does and when you need them:

THE BOOKKEEPER
A bookkeeper handles the day-to-day transaction recording — categorizing income and expenses, reconciling bank accounts, managing accounts payable, and producing monthly financial statements. Without accurate monthly books, you have no financial visibility. Bookkeeping can be done internally by a trained staff member or outsourced to a bookkeeping service.

What you need from your bookkeeper: clean, accurate monthly financial statements — P&L, balance sheet, and ideally a cash flow statement — delivered within two weeks of the month closing. If your books are more than 30 days behind, you are managing the business blind.

THE CPA (Certified Public Accountant)
Your CPA handles tax preparation, tax planning, and any work requiring a licensed accountant. For a home care agency, this typically means quarterly estimated tax payments, annual business and personal tax returns, and guidance on entity structure and compensation strategy.

A CPA with healthcare or small business experience is worth the additional cost over a general tax preparer. Healthcare-specific deductions, reasonable compensation analysis for S-corps, and depreciation strategy are areas where an experienced CPA saves more than their fee.

THE FRACTIONAL CFO
A fractional CFO is a senior financial executive who works with your agency on a part-time or project basis — typically a few hours per month or per quarter. They do the strategic financial work: building financial models, analyzing payer mix profitability, evaluating growth investments, preparing you for a loan or line of credit, and translating your financial data into business decisions.

For most home care agencies, a fractional CFO becomes relevant somewhere between $1M and $2M in revenue.

At every stage, you need clean books.

Your break-even point is the minimum monthly revenue — or minimum billable hours — required to cover all of your operati...
09/01/2026

Your break-even point is the minimum monthly revenue — or minimum billable hours — required to cover all of your operating costs with zero profit margin. It is the floor. Everything above it is contribution to profit. Everything below it is a loss.

Here is how to calculate it — and why it matters more than almost any other number in your business:

THE CALCULATION

Take your total monthly fixed costs — everything that stays the same regardless of whether you serve 50 clients or 100. Administrative salaries, rent, software, insurance premiums, professional services. Add them up. This is your fixed cost total.

Now take your average revenue per hour minus your variable cost per hour (direct caregiver wages plus taxes plus workers' comp). This is your contribution margin per hour — how much each billable hour contributes toward covering your fixed costs.

Divide your total fixed costs by your contribution margin per hour. The result is your break-even hours per month.

EXAMPLE:
Fixed costs: $20,000/month
Average revenue per hour: $22 (blended across payers)
Variable cost per hour: $18
Contribution margin: $4/hour
Break-even: $20,000 / $4 = 5,000 hours/month

That agency needs to bill 5,000 hours per month before they make a single dollar of profit. Every hour above 5,000 contributes $4 to the bottom line.

WHY THIS NUMBER CHANGES HOW YOU MAKE DECISIONS

When you know your break-even, you can answer questions like:
Can I afford to hire a care coordinator? (What does it do to my fixed costs and therefore my break-even?)
What happens to my break-even if I increase caregiver wages by $1/hour?
How many new clients do I need to bring on to be profitable with this new hire?

These are not abstract questions. They are decisions you face every month. The agency owner who can answer them with numbers makes better decisions than the one who answers them with instinct.

Calculate your break-even this week. Write the number down. Put it somewhere you will see it.

Most small home care agencies do not have an operating budget. Those that do often build one in January and look at it a...
08/31/2026

Most small home care agencies do not have an operating budget. Those that do often build one in January and look at it again in December. Neither approach gives you what a budget is actually for: a tool for making decisions in real time.

Here is how to build and use a real budget:

BUILDING THE BUDGET

Start with revenue. What is your projected monthly billable hours by service line and payer? Multiply by your reimbursement or billing rate for each. This is your revenue projection.

Then build your expenses in two categories:

Variable expenses — those that scale with volume. Direct caregiver wages, payroll taxes, workers' comp, mileage. These should be expressed as a percentage of revenue or as a per-hour cost so they automatically adjust when your census changes.

Fixed expenses — those that stay relatively stable regardless of volume. Rent, administrative salaries, software subscriptions, insurance premiums, professional services. These are your baseline monthly burn.

The difference between projected revenue and total projected expenses is your projected net income. If that number is negative, you need to either increase revenue, reduce costs, or both — before the month happens, not after.

USING THE BUDGET MONTHLY

Every month, your actual revenue and expenses should be compared to the budget. This is called a variance report. For every line where actuals deviate significantly from budget — say, more than 10% — you want to understand why.

Revenue below budget: Is it a census issue, a billing delay, or a payer problem?
Caregiver wages above budget: Did you have more hours than projected, or did your cost per hour increase?
Administrative expenses above budget: Was there a one-time cost, or is there a recurring expense that was not captured?

This monthly variance review — which should take 30 to 45 minutes with your financial reports in hand — is how a budget becomes a management tool rather than a planning exercise.

Pricing in home care is one of the most consequential decisions an agency owner makes — and one of the least systematica...
08/28/2026

Pricing in home care is one of the most consequential decisions an agency owner makes — and one of the least systematically approached.

Here is the framework for building a pricing strategy that sustains your business:

STEP 1: START WITH YOUR COST, NOT THE MARKET
Your private pay rate must at minimum cover your true cost per hour of care plus a margin that funds your growth and compensates you for the risk and work of ownership. If you calculated your true cost per hour in yesterday's post, use that as your floor. Your rate should be above it.

STEP 2: UNDERSTAND THE MARKET RANGE — WITHOUT BEING ANCHORED BY IT
Know what other agencies in your market charge for comparable services. This is useful context. But if the market rate is below your cost of delivery, the answer is not to price below your cost to be competitive. The answer is to either find ways to reduce your cost structure or to differentiate your service in a way that justifies a higher rate.

STEP 3: DIFFERENTIATE ON VALUE, NOT RATE
The families paying private pay rates are not primarily buying price. They are buying trust, responsiveness, caregiver quality, and peace of mind. An agency that consistently delivers on those dimensions — can command a premium.

STEP 4: REVIEW RATES ANNUALLY
Your costs change. Your overhead changes. If you have not adjusted your private pay rate in two or more years, you are almost certainly subsidizing your clients with your margin. Build an annual rate review into your business calendar. Give existing clients advance notice — 30 to 60 days — of any rate increase.

STEP 5: KNOW WHEN A CLIENT IS UNPROFITABLE
Not every client engagement is worth keeping at any price. A client who requires specialized care beyond your standard service offering, lives in a distant part of your service area, or has a family dynamic that requires disproportionate management time — at your current rate, that client may be costing you more than they generate.

This is one of the most important financial exercises a home care agency owner can do — and one of the least commonly do...
08/27/2026

This is one of the most important financial exercises a home care agency owner can do — and one of the least commonly done. Your true cost per hour of care is not just the caregiver's hourly wage. It is everything that comes with delivering that hour. When you know this number, every pricing decision, every payer mix decision, and every growth decision gets dramatically clearer.

Here is how to calculate it:

DIRECT LABOR COSTS (per caregiver hour)
Start with the caregiver's hourly wage. Add the employer's share of payroll taxes — F**A, FUTA, SUTA — which typically adds 10 to 12% to the base wage. Add workers' compensation insurance, which in home care typically runs 4 to 8% of wages depending on your state and claims history. Add any mileage reimbursement or travel cost if applicable.

For a caregiver earning $15/hour, your direct labor cost including taxes and workers' comp is likely $17.50 to $18.50 per hour.

OVERHEAD ALLOCATION (per caregiver hour)
Your overhead — office rent, liability insurance, software, administrative salaries, marketing, training, professional services — needs to be divided across your billable hours to understand what each hour has to contribute to cover it.

If your monthly overhead (excluding direct caregiver costs) is $15,000 and you bill 1,500 caregiver hours per month, your overhead allocation is $10 per hour.

YOUR TOTAL COST PER HOUR
Direct labor ($17.50 to $18.50) plus overhead ($10) equals $27.50 to $28.50 per hour in this example.

Now look at your reimbursement rates. If your primary Medicaid payer reimburses $18 to $20 per hour for personal care, you now know precisely how far underwater that rate is — and how much your private pay and higher-reimbursement services need to subsidize it.

Run this calculation for your agency this week. The number will either confirm your pricing is sound or show you something you need to act on.

Let me describe what a functional $2M home care agency organizational structure typically looks like:At the center: the ...
08/26/2026

Let me describe what a functional $2M home care agency organizational structure typically looks like:

At the center: the owner/CEO, focused on strategy, major referral relationships, financial oversight, and compliance governance.

Reporting to the CEO:

A Care Operations Manager or Director — overseeing care coordination, scheduling, supervisory visits, and the field staff. This is the operational core of the agency. Without someone strong in this role, the CEO cannot step back.

A Clinical Supervisor or Director of Nursing — for agencies providing skilled services or operating under a Medicare-certified home health license. Responsible for clinical quality, QAPI, and oversight of clinical staff.

A Billing and Revenue Cycle Manager — responsible for claim submission, denial management, AR follow-up, and financial reporting support.

Under those roles:

Care coordinators who manage individual caseloads and maintain client and caregiver relationships.
Schedulers who maintain the daily schedule and fill open shifts.
Field supervisors who conduct supervisory visits and provide caregiver support.
Billing specialists and intake staff in their respective functions.

THE BUILD ORDER FOR MOST GROWING AGENCIES:

1st: a care coordinator or scheduling coordinator who owns the daily operational load. This is the hire that frees up the most owner time.

2nd: a billing specialist or relationship with an outsourced billing company. Revenue cycle has to be managed actively at any meaningful scale.

3rd: a field supervisor or lead caregiver with supervisory responsibilities. As your census grows, the supervisory visit load becomes unmanageable without this role.

4th: a care operations manager who oversees the coordination and field supervision functions. This is the hire that lets you step out of operations.

Build the base before you build the top. The CEO role is the last thing you get to focus on — not the first.

I am not suggesting you eliminate base salaries or put your team on pure commission. That would be destabilizing and in ...
08/25/2026

I am not suggesting you eliminate base salaries or put your team on pure commission. That would be destabilizing and in most cases impractical for home care operations. What I am suggesting is that the compensation structure for your supervisory and office team should have some component tied to outcomes that matter to the agency's growth. Not as a carrot-and-stick mechanism — but as a signal that performance is connected to reward.

Here are the structures that work in home care at the supervisory and operations level:

CARE COORDINATOR OR SCHEDULING COORDINATOR
Base salary plus a monthly bonus tied to caregiver fill rate and client retention. If fill rate stays above 95% and no clients discharge due to service quality issues, the bonus pays.

INTAKE OR ADMISSIONS COORDINATOR
Base salary plus a per-admission bonus for every new client who starts service within a defined window of the initial inquiry. This aligns with conversion — not just with how many calls were taken.

DIRECTOR OF NURSING OR CLINICAL SUPERVISOR (for agencies with skilled services)
Base salary plus a quarterly quality bonus tied to QAPI outcomes — hospitalization rates, patient satisfaction scores, or OASIS accuracy rates.

BILLING STAFF
Base salary plus a monthly performance element tied to clean claim rate and AR aging. If claims go out clean and AR over 60 days stays below a defined threshold, the bonus pays.

THE IMPORTANT GUARDRAILS
The targets must be achievable. A bonus that never pays because the threshold is set too high is not motivating. It is demoralizing. And the metrics must be tracked accurately. If you cannot measure it clearly, do not tie compensation to it.

Aligned incentives do not replace culture, management, or recognition. They supplement all three.

Does any part of your current team compensation reflect agency performance outcomes?

One of the most expensive mistakes a growing home care agency makes is hiring for a function that should be outsourced, ...
08/24/2026

One of the most expensive mistakes a growing home care agency makes is hiring for a function that should be outsourced, or outsourcing a function that is so central to operations it needs to be internal.

Here is the framework I use with agencies to think through this decision:

HIRE WHEN:
The function is a core daily operational role that requires real-time responsiveness, institutional knowledge, and relationship management. Scheduling, care coordination, direct client communication — these are almost always internal roles. The person in these roles needs to know your clients, your caregivers, your policies, and your agency's culture. Also hire when the function requires someone who can grow with your agency and carry institutional knowledge forward over time.

OUTSOURCE WHEN:
The function requires specialized expertise that your agency needs periodically but not daily. Accounting, legal, compliance consulting, payroll processing, IT support, credentialing — these are strong outsourcing candidates for a small to mid-size agency. A fractional CFO, an outsourced billing company, a compliance consultant — these relationships give you expert-level capability without the fixed cost of a full-time hire.

AUTOMATE WHEN:
The function is repetitive, rule-based, and does not require human judgment on a case-by-case basis. Appointment reminders to clients. Payroll calculation from EVV data. Claim generation from completed visit documentation. Benefits eligibility verification. These are automation candidates.

Map every function in your agency against this framework. The goal is not to minimize headcount. It is to have the right people in the right roles and the right tools doing the rest.

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1765 Greensboro Station Place Ste 900
McLean, VA
22102

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